NSAC's Blog

Closer To Sealing the Farm Bill Deal?

January 17, 2014

As we head into the second half of January, House and Senate negotiators inch closer to finalizing the 2014 Farm Bill. At least one of the lead negotiators has said that he expects the bill to be reported out of the Farm Bill Conference Committee during the final week of January. However, it is not hard to imagine that negotiations might last into February.

Dairy

Dairy policy remains one of the large outstanding issues, though recent statements by House Agriculture Committee Ranking Member Collin Peterson (D-MN) indicate that at least a framework of a compromise has been reached. As we reported in our earlier post, the fight is, at its most basic level, a fight between farmers—who prefer a supply management program that would cut back production if there is a collapse in dairy prices—and processors, who strongly oppose supply management. House Speaker John Boehner (R-OH) has aligned himself with the processors and has been pressing the leaders of the House and Senate Agriculture Committees to keep supply management out of the final bill.

The supply management feature is in the Senate-passed farm bill in large part because the margin protection that is the main feature of the new dairy program would tend to encourage overproduction even in cases in which prices are falling. The compromise that may be about to emerge might reduce the margin protection incentives as prices fall, or give USDA additional authority to buy up excess product, or perhaps a combination of both approaches. The deal might also give small and mid-sized dairy an alternative targeted payment option in lieu of margin protection.

No details have been shared publicly, but it appears that by skirting direct supply control and substituting other means of preventing or absorbing overproduction, the deal may be acceptable to Speaker Boehner and he therefore would allow a final bill to move to a House floor vote.

Payments in Lieu of Taxes

Over the last several days, farm bill negotiators took up and incorporated a new policy that had until now not been considered as part of the farm bill debate. Payments in Lieu of Taxes (PILT)—traditionally under the jurisdiction of the House Natural Resources Committee, the Senate Energy and Natural Resources Committee, and the Senate Environment and Public Works Committee—provide compensation for lost property taxes to rural communities that have large tracts of federal land that cannot be taxed.

Because the recently passed omnibus appropriations bill does not include FY 2014 funding for PILT, farm bill negotiators agreed to include the provision in the farm bill for a single year. Farm bill negotiators have seemingly calculated that including PILT will help secure the votes of Members of Congress from western states, many of whom signed a letter on Wednesday urging the provision’s inclusion in the farm bill. PILT is expected to increase the cost of the farm bill by roughly $400 million.

Unlimited Payments and Subsidy Loopholes

Despite the fact that the House and Senate farm bills contain identical provisions to close subsidy loopholes, the issue of payment limit reform for farm commodity subsidy programs remains up in the air, holding up the completion of the House-Senate conference proceedings. As we reported in an earlier post, under normal congressional rules, provisions included in both bills are not subject to conference negotiations. But several of the key conferees believe nonetheless they can thwart the will of the majority of both houses and strip out or severely weaken the reform in the final conference agreement, thereby coming to the aid of the country’s largest and wealthiest farmland owners who want to keep their unlimited subsidies.

The effort to strip payment limit reform from the farm bill must stop. It is undemocratic and it is irresponsible in the face of current fiscal pressures. By closing subsidy loopholes and limiting payments, taxpayers will save hundreds of millions of dollars.

Just this week, the Congressional Budget Office (CBO) reassessed how much money the payment limit reform provisions would save if retained in the final farm bill. The new estimate from CBO—$387 million over ten years—is more than twice its original estimate of $170 million. These added savings could be used to help offset the unanticipated cost of including PILT (see above) in the final farm bill.

It is still possible that the full Farm Bill Conference Committee will meet to vote on several outstanding issues, including country-of-origin labeling, catfish inspection, and state’s rights with respect to food and agricultural standards, though Senate Agriculture Committee Chairwoman Debbie Stabenow (D-MI) and House Agriculture Committee Chairman Frank Lucas (R-OK) appear to be trying to obviate a full meeting by trying to negotiate and settle these remaining issues ahead of time.

If the lead negotiators do settle all remaining issues without a public meeting, it would be impossible to know how members weighed in on specific remaining issues because it would all happen behind closed doors and without public votes. Provided, however, that a majority of conferees were willing to sign the final product, there is nothing forcing them to actually have the conference committee meet to debate and vote.

NSAC continues to support and work towards completion of a full, five-year farm bill that includes farm subsidy and payment limit reform, excludes prohibitions on enforcing fair competition laws, provides robust funding for key sustainable agriculture programs that are currently stranded, and otherwise includes key ingredients from both the House and the Senate bills.